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McDonald’s Pledges a More Aggressive 2013

Filed under Business, Global Burgers, Value Menu

McDonald’s Corp. CEO Don Thompson pledged that the world’s largest restaurant brand will be more aggressive this year in its pursuit of sales and customers. This comes as the company announced global same-store sales that were up 3.1% for full-year 2012 despite Q4 comps that rose just 0.1%. He warned that January 2013 comp sales will be negative. Some analysts speculate February numbers will be negative, too, since the month laps the 29-day leap year in 2012.

Adding the Grilled Onion Cheddar burger to the Dollar Menu was central to McDonald’s Q4 value-focused marketing strategy.

U.S. comps were up 3.3% for the year, up 0.3% for Q4. Europe sales were up 2.4% for the year but -0.6% in Q4. APMEA (Asia/Pacific/Middle East/Africa) also was negative at -1.7% for Q4 but positive at 1.4% for the year.

Thompson repeatedly emphasized that a shrinking global Informal Eating Out (IEO) Market, of which McDonald’s alone holds slightly less than a 9% share, remains a drag on brand growth. But McDonald’s will seek a bigger slice of that pie by opening 1,500 to 1,600 more stores in 2013 and remodeling another 1,600.

The CEO also promised McDonald’s will place “greater emphasis on those drivers that excite our customers.” In Q4 that included lower-price menu items including the Dollar Menu, where McDonald’s added its Grilled Onion Cheddar burger. “We had a solid value menu. We just needed to talk about it more,” Thompson said of the Dollar Menu. He said he doubted new items would be added to that value menu this year.

Value-sensitive offers such as the Le Casse Croute offer have strengthened sales in France.

For 2013, he pledged new beef burgers along with new chicken items, snacks and breakfast and beverage offers. COO Tim Fenton called the menu pipeline “more robust than a year ago. “ Thompson once again mentioned the McWrap without specifically announcing rollout plans. The chain will try to hold on menu prices, too, having raised prices just 2% in 2012. That was below the food-at-home (i.e. supermarket) inflation rate.

McDonald’s sales in Europe—where its menu prices increased by 2.5% in 2012—have been hurt by low consumer confidence (due to widespread austerity measures). Thompson said sales in France improved in 2012 and currently is responding to the “Le Casse Croute” offer of a baguette sandwich and beverage for €4.50. The UK remained a “bright spot” and an example of how to effectively market premium items, Thompson said. Germany is extremely “cost sensitive,” he said, requiring heavier value messaging, including its McDeals offers.

In Australia, McDonald’s is revamping its Loose Change Menu to boost the lower end of its menu and to balance premium items such as the Serious Lamb Burger. McDonald’s has introduced the TrackMyMacca’s smartphone app in Australia. The decline in APMEA sales has been largely a result of “Japan’s uneven recovery and China’s slower growth.” McDonald’s opened 256 units in China this year and expects to meet its goal of 2,000 locations there by the end of this year.

“Our business, brand and financials remain strong and we will continue to build on them,” Thompson said in conclusion.